C hocol ate B onds I nvitation D ocumen t
Doing things differently‌
‌doing things better
This document is important and requires your immediate attention if you wish to participate in this issue of chocolate bonds. If you are in any doubt about the action you should take or the contents of this document, you should contact your stockbroker, solicitor, accountant, bank manager or other professional adviser authorised by the Financial Services Authority to conduct investment business and who specialises in advising on investment in shares and other securities, including unlisted securities. This document constitutes an invitation to subscribe for three year bonds (“Chocolate Bonds”) in The Chocolate Tasting Club plc (“the Company”), on the terms and conditions set out in this document (the “Offer”). The Chocolate Bonds will be non-convertible, unsecured, non-transferable, and will provide investors with a return in the form of a chocolate box at specified intervals. The Chocolate Bonds will be repayable in three years at the holder’s option, and will have the other rights and benefits set out in this document. Investment in the Chocolate Bonds involves certain risks. For a discussion of certain factors that should be considered in connection with an investment in the Chocolate Bonds, please see the section headed “Risk Factors” on page 16 of this document. The Chocolate Bonds are an unsecured debt of the Company and they may not be a suitable investment for all recipients of this document. Prospective investors should consider carefully whether an investment in the Chocolate Bonds to be issued by the Company is suitable for them in the light of their personal circumstances. Investors should not subscribe for any Chocolate Bonds referred to in this document (“Invitation”), except on the basis of the information published
in this Invitation and the instrument dated 20th May 2010 constituting the Chocolate Bonds of the Company (“Instrument”). This Invitation, which is a financial promotion for the purposes of Section 21 of the Financial Services and Markets Act 2000, is issued by the Company which accepts responsibility for the information contained herein. This document has been approved as a financial promotion for UK publication by BDO LLP (“BDO”), 55 Baker Street, London W1U 7EU, which is authorised by the Financial Services Authority to conduct investment business. BDO is acting exclusively for the Company in connection with the issue of the Chocolate Bonds and no one else, and will not regard any other person as its customer or be responsible to any other person for providing the protections afforded to customers of BDO or for advising any such person in relation to the issue of Chocolate Bonds. Application should only be made on the basis of the Invitation and the Instrument. This Invitation does not constitute an offer of transferable securities to the public and accordingly this Invitation does not constitute a prospectus to which the Prospectus Rules of the Financial Services Authority apply. Therefore, this Invitation has not been approved by the Financial Services Authority or any other regulatory body. You should ensure that you read and understand all of this Invitation before applying for Chocolate Bonds. If you are in any doubt as to the contents of this Invitation, or whether subscribing for Chocolate Bonds is a suitable investment for you, you should seek your own independent advice from an appropriately qualified adviser authorised under the Financial Services and Markets Act 2000 who specialises in advising on the acquisition of unlisted securities.
The Chocolate Tasting Club plc C hocolate B onds I nvitation
C ontents 1 Introduction 2 Introducing the Chocolate Bond 4 Your questions answered 6 Four ways in which the funds will be used 7 Creating manufacturing jobs in the UK 8 Developing a truly sustainable business model in cocoa growing 9 Further careful growth of our UK store portfolio 10 Exporting high quality British chocolate 11 The Club’s performance 13 The Team 16 The Legal Bits
– Risk factors you should know about – Terms & conditions – The application process and timetable – The Instrument
24 References
A very natural process – cocoa beans drying in the sun at Rabot Estate, St Lucia. They need to be turned by hand several times a day using a special wooden paddle.
I ntroduction
1
The investment that pays a return in chocolate As a Tasting Club member, you’re probably already aware that we like to do things in better, more innovative ways whenever we can. This, coupled with the incredible loyalty and passion of our members, led us to think that you might relish the opportunity of being part of our exciting developments in the future by investing in them – with the added bonus of receiving a return from that investment in the form of chocolate. And so we have created the Chocolate Bond.
“A brilliant
idea and what a tasty return. Thanks Angus T
”
Angus Thirlwell, CEO and Club Founder.
B. Butler, Club Member*
The Chocolate Bond is an opportunity for you to help us achieve our aims as a cocoa grower, a British manufacturing chocolatier and a crusader for authentic chocolate through all of the Club’s activities and those of the other Hotel Chocolat family of companies, whilst earning a fair return at the same time – we want to make it good for your pocket, your taste buds and for your spirit. We have spent 20 years building up our chocolate business and, during the last 12, seeing the Club grow from nothing to 100,000 members. We are immensely grateful for the loyalty of hundreds of thousands of regular customers. This loyalty has enabled us to weather the recession well and maintain our plans for exciting future developments – creating jobs and value in British manufacturing, creating a sustainable cocoa growing environment in Saint Lucia and generating much needed export currency for the UK economy as we take our re-invention of British chocolate to overseas markets.
Angus meets with Tasting Club members at the 100 Club Event, at which the first Club members to have taken 100 Club selections were invited to spend a day at Hadley Park, our Cambridgeshire chocolate factory.
“ What a fantastic and
novel way of raising capital – delicious too!
”
When it came to considering the funding for some of the next stages of our growth, we wanted to find a way we could pay a return to you, our customers, rather than to big banks. And here it is, the Chocolate Bond. I hope you agree that it stays true to our deep-seated ethos of being novel, imaginative and bold – providing a far more exciting form of return than usual and an opportunity to be part of a force for good in the chocolate world. Welcome to our Invitation Document – it is, by necessity, a detailed read (!) but I hope you find it an interesting one that covers all the questions you may have. Our research suggests that this initiative is much welcomed by members as their comments shown on these pages indicates. Best wishes
H. A. Jarratt, Club Member*
* A ll quotes in this section and Your Questions Answered are taken from comments made by Club Members when this project was researched late last year.
Angus Thirlwell Club Founder C hocolate B onds I nvitation The Chocolate Tasting Club plc
2
I ntroducing
the
C hocolate B ond
Introducing the Chocolate Bond Like many of the best innovations, ours is essentially a very simple idea. In exchange for taking up a Chocolate Bond, you will receive a return in the form of chocolate. In other words, some or all of your Tasting Club boxes will be supplied free, depending on the value of the Chocolate Bond applied for and issued. There are two options: 1. Invest £2,000 for three years and receive six Tasting Boxes free each year, worth £107.70 a year – equivalent to a 5.38% return or 6.72% gross return for a basic rate taxpayer; or 2. Invest £4,000 for three years and receive 13 Tasting Boxes free each year, worth £233.35 a year – equivalent to a 5.83% return or 7.29% gross return for a basic rate taxpayer. Both the amounts and rates quoted above are based on the current price for the standard member selections of £17.95. A different arrangement is available to members taking the Trio selection -- please see Your Questions Answered #6 (page 4).
All the Tasting Club selections are available free when you take a Chocolate Bond: Classic, Dark, Elements and Trio.
The Chocolate Tasting Club plc C hocolate B onds I nvitation
As is the case with more traditional bonds, the more you invest the higher the return you will receive. The difference is, your investment in the Chocolate Bond will earn a return in the form of chocolate. The initial term of the Chocolate Bond is for three years from the date of issue subject to our right to repay some or all of the Chocolate Bonds early at any time. After that three-year period, and on every anniversary thereafter, you can redeem your Chocolate Bond and you will receive your investment back in full, such being the nominal amount (either £2,000 or £4,000) paid for the Chocolate Bond. Or, if you choose not to redeem and continue to hold your Chocolate Bond, you will continue to receive your return in the form of free monthly Tasting Boxes. However long you decide to hold the Chocolate Bond, your rate of return is fixed in terms of the number of free Tasting Boxes you receive. The Chocolate Tasting Club will also make the necessary basic rate tax payments due on your investment in the Chocolate Bond – meaning that there should be no liability for tax if you are a basic rate UK taxpayer. However all applicants who are or may be liable to tax, especially higher rate taxpayers, should consult their own financial advisers as tax may be payable in some cases.
I ntroducing
the
C hocolate B ond
3
“I think this is a splendid idea – more power to you and less to the banks! Good luck with it.”
S. Elomari, Club Member
C hocolate B onds I nvitation The Chocolate Tasting Club Plc
4
Y our Q uestions A nswered
Your questions answered 1.
Why do you need the money? We want to continue to invest in the Rabot Estate and elsewhere in Saint Lucia, where we’re working with local growers to develop high–quality,sustainable cocoa plantations. And, in turn, we’re ensuring that growers are paid appropriate prices for excellent cocoa, instead of being required to grow ‘commodity’ cocoa beans and have the sale prices forced down by multinationals and ‘middle men’. We also intend to use the money raised in our factory at Huntingdon, to enlarge the facilities and add further equipment to extend both the capacity and the scope of the chocolates we can make. We also plan to use some of the money raised to open more shops in Britain and extend our activities overseas.
2.
Why don’t you raise the money from the bank? We can and we will if we need to. But we think that this way of raising some money means we could let some of our best customers participate in the business and give them the benefits, rather than handing it over to a big bank.
3.
What’s the tax position? We will make the necessary arrangements to pay tax direct to HM Revenue & Customs for basic rate taxpayers – so you won’t have to share your chocolates with the tax man! However we strongly recommend that all applicants who are or might be liable for tax, especially higher rate tax payers, consult their own independent financial advisors as tax may be payable.
4. Can I get my money out? Yes, you can get your investment back in full after the initial term of three years, which is the minimum commitment. After that, and on each anniversary thereafter, you will be entitled to all of your investment back, without charges or deductions. Or you can choose to hold onto your Chocolate Bonds. 5.
Is the chocolate rate of return fixed? Yes. For the period of your investment the chocolate rate of return will not change in terms of the number and type of boxes you receive. We have the right to redeem some or all of the Chocolate Bonds at any time (whether before or after the initial three-year term).
6. I get the Trio box – does that work in the same way? As a Trio member you’ll appreciate that your box is more expensive than the standard box. So, in order for you to earn the same rate of return, it would require either that you make a higher payment, or a reduction in the number of free boxes each year. After a great deal of thought, we have decided the latter was more appropriate. Trio members who take a £2,000 Bond will get five free boxes and those who take a £4,000 Bond will get 11 free boxes each year.The respective The Chocolate Tasting Club plc C hocolate B onds I nvitation
return values and net rates are £114.75 (5.73%) and £252.45 (6.31%) which is slightly higher than those offered for the standard boxes. You can, of course, switch from Trio to the standard size and receive the greater number of free boxes, but if you decide to do that, please do so before 12th July 2010.
7.
I currently take a standard box, can I switch to Trio? Yes you can, but please make the change before 12th July 2010.
8.
Can I change my choice of selection? Absolutely, you can switch from Classic, to Dark, to Elements and back again at any time! Your chocolate return will still be applicable irrespective of which selection you take with the exception of Trio (please see #6 and #7 above).
“ This sounds like an excellent idea for both parties.” T. Tuffnell, Club Member
9.
Can I change the frequency I receive my selections? Yes, you can receive your boxes as and when you want just like normal. But clearly if you take a £4,000 Bond there is no point in having a frequency of other than every four weeks, or with a £2,000 Bond a longer time gap of eight weeks as, in either case, you will simply start to build up your chocolate return (see #12 below).
10. When will I start to get my free boxes and how often? Your first free box will be the first that is due to be sent to you on or after 1st August 2010. You will then continue to receive them on your normal schedule for as long as you have a chocolate return credit. 11. What happens if I currently take every monthly box but only take a £2,000 Bond, which entitles me to just six free boxes? From the beginning of August 2010 you will receive your regular box every four weeks. The first six of these will be sent to you free of charge as your chocolate return. Thereafter you will continue to receive further boxes every four weeks (unless you decide on a different frequency) and these will be charged at the standard price and will be payable by you. Then, from August 2011 the process will start again – once more you will receive six free boxes and then only the subsequent ones will be charged for. That will be repeated for the duration of your Chocolate Bond. In this way you’ll actually earn your return right from the start, more preferable than most normal types of investment, where you only receive your dividend at the end!
Y our Q uestions A nswered
12.
What happens if I don’t take all the boxes I am entitled to each year? If you delay or suspend deliveries of boxes you could well have chocolate return left over at the end of each year. Normally this will be carried forward into the next year. If you take a £4,000 Bond this process will be repeated every year and it is possible that you could build up your entitlement to a number of free boxes by way of chocolate return. In this case, when you decide to redeem your Bond you will still be entitled to receive your chocolate return boxes until all have been used, or one year has elapsed, whichever is the sooner. In exceptional circumstances, we may be able to come to other arrangements to redeem unused chocolate return, but these will carry an administration charge.
13. What happens if the price of the Tasting Club boxes increase? You will still receive all the boxes you are due by being a Bondholder completely free of any extra charges. 14.
Can I pay for the Bond in instalments? Unfortunately no. All Bonds must be paid in full by cheque upon application. Any applications received without full payment cannot be accepted.
15.
How many Bonds can I have? Chocolate Bonds are designed to be a personal investment, but we appreciate some members may wish to take them out so that the chocolate return can be given to friends and family members. For this reason we have set a limit of a maximum investment of £10,000 equating to, say, two £4,000 Bonds and one £2,000, or five £2,000 Bonds or any combination totaling £10,000 or under.
16. Can I sell or give my Chocolate Bond to someone else? No. Chocolate Bonds are not transferable. However, you can instruct us to send your free boxes to another address within the UK. PLEASE NOTE that if you are not taking up a £4,000 Bond there may come a time when your chocolate return runs out and the boxes need to be paid for. To avoid this problem we suggest using our auto debit service, so any payments could be charged automatically to your credit/ debit card rather than your recipient receives the bill.
17. What happens if I die while I hold a Chocolate Bond? None of us are immune from tragedy and understandably this is a question we have been asked to tackle! The Chocolate Bond would be redeemable straight away and the cash value would become part of your estate as any other asset. Obviously we would need to receive authority from the personal representatives of your estate with proof of their entitlement to act in matters of Probate or letters of administration. Because of the Bond’s non-transferable status you would not be able to give away any Chocolate Bond. 18.
How do I redeem my Chocolate Bond? You simply complete the form on the reverse of your Chocolate Bond Certificate and send it to us six months prior to the redemption date (being the end of the three-year initial term
5
or each anniversary thereafter). We will make payment within seven days of the redemption date. If you lose your Chocolate Bond Certificate you will need to notify us and we will either replace or send you a form to use for redemption at the appropriate time, subject to payment of an administration fee.
19.
Would holding a Chocolate Bond mean that I have shares in the Company? No. A bond represents a loan to a company not shares in a company. Bonds are traditionally loans for a fixed period with a fixed rate of interest.The Chocolate Bonds cannot be converted into shares.
20.
Wouldn’t I be better off putting my money in a building society or something similar? Certainly you would virtually eliminate risk and gain more flexibility, but to earn the same value of return generated by a Chocolate Bond you would need to invest considerably more. For example, to match the value of the return on a £4,000 Chocolate Bond you would need to invest over £7,700 in a building society or similar account paying a typical 3% and it would need to be over £9,700 if you are a standard rate tax payer. (Based on interest and taxation rates extant in May 2010).
“A well thought out scheme, with potential benefits to all concerned.”
A. Haines, Club Member
21.
Do I need to discuss this with an independent financial advisor? We would strongly recommend you do so depending on your experience in financial investments.
22. I still have questions, how can I have them answered? If they concern your personal investment portfolio, you should put them to your own independent financial advisor. If they concern the terms of the Bond itself please write or email us at the addresses below and include your telephone number: Post: Chocolate Bonds Enquiry, FREEPOST (ANG10659) Royston SG8 5YD Email: Bonds@chocs.co.uk We will endeavour to respond within 48 hours of receipt. 23.
I’d like to take up a Bond so what do I do next? Please complete the enclosed application form or you can download a copy of the form from www.chocs.co.uk/ chocbond and send it to us with a cheque made payable to ‘Neville Registrars Limited, a/c Chocolate Bonds’ to reach us no later than 5pm on 12th July 2010.You will be advised of acceptance of your Bond application no later than 2nd August 2010 and your Chocolate Return will be credited immediately. A Bond Certificate will be sent to you with the acceptance notification or shortly afterwards.
C hocolate B onds I nvitation The Chocolate Tasting Club plc
6
F our
ways in which the funds will be used
Four ways in which the funds will be used Over the past 20 years, we have built our chocolate business on three guiding principles – originality, authenticity and ethics. They penetrate to the very core of our business and they remain at the heart of all we do. We are a family of companies that now stretches from growing cocoa in Saint Lucia to making our own chocolate here in the UK, and from a thriving UK Tasting Club that is reaching out into Europe and beyond to a US website, 40 UK stores and recent openings in Boston, USA, and the Middle East. But we’re an ambitious bunch and we want to do more, much more. So, with our mantra of originality, authenticity and ethics firmly at heart, we have set out examples of four of the exciting future development projects planned, both here in the UK and internationally.
“
You were one of the first to champion authentic ingredients in chocolate and stop using hydrogenated vegetable fats. Now look how everyone has followed you!
”
felt extremely privileged to have such a personal “ We tour and to hear the history of the plantation and the families and the provenance of the chocolate. Such a great project to be involved with and fascinating that the development and regeneration is going beyond the estate and into the community.
”
Tasting Club Member who visited Rabot Estate 2009
Clockwise from top: The entrance to the Rabot Estate; Estates Director Phil Buckley with his team; Drying tables which slide on runners to go under the cover at night or if it should rain;
The historic estate house; View from the estate – palm trees, Pitons, blue sky and blue sea – this is Saint Lucia!
The Chocolate Tasting Club plc C hocolate B onds I nvitation
A.K. Wigan, Club Member
C reating
manufacturing jobs in the
UK
7
1. Creating manufacturing jobs in the UK British manufacturers, especially chocolate makers, are a dying breed here in the UK. Five years ago we bought a site in Huntingdon, Cambridgeshire, and set about making it a centre of innovation in chocolate making, where creativity and high quality ingredients meet the best in chocolate making technology. From a standing start we have created more than 300 jobs over three years, all centred around chocolate making – from recipe development and factory floor chocolate making, to engineering, packaging, purchasing, warehouse and delivery.
“
I love the reaction I get when someone asks me where I work! Hotel Chocolat: Great people to work with, a brilliant product, and a commitment to providing the best customer service ever. All very good reasons why I celebrated 10 years service with Hotel Chocolat!
”
Rosie Turner, Customer Experience Team
Hadley Park, our Chocolate factory in Cambridgeshire.
“
Clockwise from below: Hand decorating chocolates – that’s why no two are identical!; Chocolate moulding in action; The heart of the chocolate factory.
It is quite rare to work in an environment where everyone is genuinely passionate and understands the values of the company – I talk about my work all the time!
”
Sarah Richardson, Hotel Chocolat
The site is set on five acres and covers 60,000 square feet. It is now known as Hadley Park after our first Manufacturing Director, John Hadley, who pioneered the development of this site and who retired last year. Over the next five years we intend to invest more in Hadley Park in order to
make a wider range of chocolate types and genre, as well as increase the scale of our output.The net proceeds raised from the issue of the Chocolate Bonds will help us to almost double our workforce at Hadley Park, creating an estimated 250 new jobs over the next five years.
C hocolate B onds I nvitation The Chocolate Tasting Club plc
8
D eveloping
a truly sustainable business model in cocoa growing
2. Developing a truly sustainable business model in cocoa growing “ This company is a fine example of the type of business
that integrates agriculture with industry and one which Saint Lucia needs very much, especially at this time.
”
Titus Preville – Saint Lucian Ministry of Commerce, Trade & Investment
When we bought Rabot Estate five years ago, the cocoa growing sector in Saint Lucia had dwindled to an all-time low. Cocoa pods were left unharvested to rot on trees, no new trees had been planted for many, many years and investment in cocoa growing had all but evaporated. It certainly was not a good way to earn a decent living. Fast-forward to the present day and the picture has been transformed. Our Engaged Ethics Cocoa Programme has revived interest in cocoa amongst farmers – 80 growers are now part of our programme that offers help and advice as well as a guaranteed market for their cocoa. Thousands of new trees have been planted, replacing old, unproductive trees and increasing the area under cocoa. As a result, cocoa is now seen as a sustainable industry to invest in and it is estimated 200 agricultural jobs have already been created. How have we achieved this? By leading by example and showing commitment to the cocoa sector in reinvigorating Rabot Estate as a centre of cocoa growing expertise. This is what Engaged Ethics is all about – getting stuck in with our sleeves rolled up and making direct investments.
“
Investment of this nature is exactly what we need here. I wish this company all the best.
”
Visitor to our exhibition stand at Saint Lucia’s 30th Independence Anniversary Exhibition
“ Thanks for bringing Prince Charles’ amusing comment to the Saint Lucian Minister of Agriculture The Hon. Ezeckiel Joseph as they shared the task of digging the ground for the site of the Rabot Estate factory.
is the closest I’ve ever seen a “ This Minister of Agriculture get to dirt!” The Chocolate Tasting Club plc C hocolate B onds I nvitation
Saint Lucia together, we will be world class. Keep up the good work! Senator Alan Chastanet, Saint Lucian Minister of Tourism
”
F urther
careful grow th of our
UK
store portfolio
9
So what’s next? Plans are already well advanced to build an eco chocolate factory. It’s certainly a bold idea, but it is completely in tune with our Engaged Ethics. And what’s more, it is sustainable because it makes sound financial sense. • Rare and fine flavour cocoa from the region will be roasted, milled and conched on site at Rabot Estate. • The value will be added in the cocoa growing region, rather than back in Europe – with benefits for the Saint Lucian economy and for local employment opportunities. • Visitors to our Rabot Estate will be able to experience complete pod to bar chocolate making, set within a working cocoa estate.
Some of the drying tables at the Rabot Estate – the cocoa beans dry naturally in the sun during the day and the tables, which are on rollers, slide under the cover at night (or if it rains!).
Engaged Ethics in St Lucia in Summary • we buy cocoa direct from our island partners at a substantial premium to the world commodity price
• we pay in full promptly • we guarantee to buy the whole
• The finished chocolate will be sold locally and also exported (via traditional banana boats!) back to the UK for our customers here.
quality approved crop. This means the farmers can plan ahead and invest in their farms.
3. Further careful growth of our UK store portfolio With 40 stores already well established across the UK, we are keen to exploit current opportunities to further grow our presence. In the commercial property market opportunities have indeed opened up to secure strong shop locations at attractive rents and with flexible lease options.
Thanks to resilient trading* we are in a strong position and it makes sense to press home our advantage at this time to take on further shops – our aim is to increase our portfolio to 70 shops over the next three years, creating up to a further 100 jobs in the UK. *Like for like growth of 14% July to December 2009 – thanks to the loyal support of our amazing customers.
feel I have an enviable role chatting to “ Icustomers about our chocolates, ethics and history of the company. Our store continues to flourish despite competition from others – our unique selling point as a British chocolatier and cocoa grower sets us apart.
”
Jackie Tebbit, Store Manager, Hotel Chocolat Cambridge
“
Speaking to customers who have visited us from all over the world is fascinating; it’s brilliant to think how many chocolates bought in our store have travelled the globe!
”
Emily Hobbs, Store Manager, Hotel Chocolat Canterbury
C hocolate B onds I nvitation The Chocolate Tasting Club plc
10
E xporting
high qualit y british chocolate
4. Exporting high quality British chocolate USA There is strong demand overseas for quality-led British brands. Our first international store opened in Boston, Massachusetts, in October 2009 and it has enjoyed a warm reception from the Bostonians. Our aim is to carefully expand our presence in the USA, in a risk-controlled way.
“ I guess I have to say it – the British have come!”
Mayor Menino of Boston, at the opening of the first Hotel Chocolat store in the USA in Newbury Street, Boston
Angus joins the Mayor of Boston and the British High Commissioner for Massachusetts at the opening of the Newbury Street store – the first in the US.
T he M iddle E ast
G ermany & S candinavia
After careful research, we have selected a franchise partner with a strong commercial track record to spearhead our Middle Eastern operation. The first shop in Bahrain opened this January, the second in Dubai in March and Kuwait, the third, in April. Sales are strong and experienced company director, Lynn Cunningham, well known to Tasting Club members, has been organising the launch.
The Chocolate Tasting Club has now been launched in Germany, Sweden and Norway with further expansion into Denmark, Austria and the USA all planned in careful stages. These are clearly exciting times for The Chocolate Tasting Club, taking our own exclusive brand of high quality British chocolate to our European neighbours and further afield – when was the last time that happened? Early indications from Germany and Scandinavia are that the concept is well understood and much appreciated, which offers significant growth opportunities.
“
We have experienced much enthusiasm from customers in Germany wanting to join the Club. It was wonderful that Lynn was able to come and train us and speak in German.
”
Nadine Ritter, Club Manager for the German Chocolate Tasting Club.
“ Bahrain, our first Middle East store – quickly joined by Dubai and Kuwait.
We signed the franchise for Hotel Chocolat in 2009 when the economic climate was challenging and have now opened three stores in a span of eight weeks. Trading has exceeded our expectations and the Hotel Chocolat brand has definitely created a buzz among consumers and landlords alike. We are delighted with the level of support provided by the Hotel Chocolat team since inception and the success seen is the result of this support.
”
Faisal Jawad, Chairman, Jawad Business Group The Chocolate Tasting Club plc C hocolate B onds I nvitation
T he C lub ’ s
performance
11
The Club’s performance The Chocolate Tasting Club activities started in 1998 as part of the overall business (then called ChocExpress) and grew so large that it became a separate company in 2004. Since then it has continued to develop although, in keeping with many businesses, 2008 proved to be a tough year. However in 2009 we reversed the trend by improving sales and reducing costs to produce a near £1 million pre-tax profit. This year, despite the recessionary pressures, we have already achieved a good increase in both sales and profits as shown below by the (unaudited) figures for the first nine months. T he C hocolate T asting C lub plc P rofit and loss account for the year ending 30 th J une 2007* 2008* 2009* Turnover 11,501,618 10,137,154 11,071,107
Unaudited Unaudited Management Management Accounts Accounts 9 months to 9 months to 29/03/09 28/03/10 8,844,270
9,940,304
Cost of sales
4,233,926
3,675,697
4,326,312
3,918,335
3,985,891
Gross profit
7,267,692
6,461,457
6,744,795
4,925,935
5,954,413
Operating charges
6,628,839
6,300,319
5,808,058
4,375,776
5,169,255
Operating profit
638,853
161,138
936,737
550,159
785,158
Interest receivable
(18,484)
(18,961)
(834)
0
0
1,124
4,997
31,168
27,764
23,864
656,213
175,102
906,403
522,395
761,294
Tax
199,460
48,862
255,088
Profit after tax
456,753
126,240
651,315
Interest payable Profit before tax
11
£millions
£millions
15 10 5 0
0 2007
2008
2009
0.8
£millions
£millions
1.1
0.5
2007
2008
2009
Profit before tax * Extracted from audited accounts
9 mths to 9 mths to 29/03/09 28/03/10
Turnover with like-for-like comparison against last year
Turnover last three years
0
12% Turnover growth
5
46% Profit growth
0.4
0
9 mths to 9 mths to 29/03/09 28/03/10
Profit before tax with like-for-like comparison against last year
12
T he C lub ’ s
performance
The Chocolate Tasting Club plc has been profitable every year since it became a limited company. Profits have been consistently reinvested in the business which has helped us to build a strong and resilient company. This is reflected in the continuing growth of the total net assets shown in the balance sheets below.
T he C hocolate T asting C lub plc B alance S heet as at the year ended 30 th J une 2007* 2008* Fixed assets 71,781 35,931 Current assets
2009* 20,331
Stocks
136,940
230,503
171,911
Debtors
3,226,849
4,929,136
3,759,670
Cash at bank
229,616
0
0
3,593,405
5,159,639
3,931,581
Creditors
3,194,142
4,598,286
3,203,313
Net current assets Total assets less current liabilities
399,263 471,044
561,353 597,284
728,268 748,599
50,000
50,000
50,000
157,348
157,348
157,348
Profit and loss account
263,696
389,936
541,251
Shareholders’ funds
471,044
597,284
748,599
Capital & reserves Share capital paid up Share premium account
800
£000’s
700
600
500
400 2007
2008
2009
Increase in Net Assets
The Chocolate Tasting Club plc C hocolate B onds I nvitation
* Extracted from audited accounts
T he T eam
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The Team I ntroduction The Chocolate Tasting Club is a part of the Hotel Chocolat family of companies, which are all independent but share the same ownership – an equal 50/50 split between the two co-founders, Angus Thirlwell and Peter Harris. Self-funded by the two business partners, this family has grown substantially year by year and now has a combined turnover of £50 million. Over the years, Peter and Angus have gathered together a group of people with high professional skills who have been instrumental in providing the impetus for that growth and then sustaining it. By the same token, each member in the group acknowledges the inspiration provided by the two co-founders that has enabled them to develop their skills and produce those results. This is the Team. Angus Thirlwell Co-Founder and CEO
Peter Harris Co-Founder and Finance Director
Terry Waters Managing Director, The Chocolate Tasting Club plc
With his grandmother’s patisserie shop and his father’s ice cream business, Angus has food entrepreneurship hard-wired into his genes. A childhood spent in the Caribbean, home to some of the world’s best cocoa, kindled a love for cocoa and this region – which would later lead to the purchase of the Rabot Estate cocoa plantation in Saint Lucia. A further influence was the two years spent living and working in France where his reverence for real food was further developed.
Meeting at a computer company in the early 1980’s, Peter and Angus quickly struck up a friendship that developed into the business partnership that became Hotel Chocolat. No question: Angus did the marketing and Peter looked after the finances. However, Peter has never confined himself to just “bean counting” and will be found in Saint Lucia, Bahrain, Boston and visiting (and occasionally serving in) shops in the UK. Peter has been able to balance fast growth with good profitability and can probably be credited with enabling Hotel Chocolat companies to be listed in the Sunday Times fastest growing companies on two occasions – one in first place! Peter is a qualified Chartered Accountant.
Sometimes referred to as a “continuity marketing guru”, it was a whacky idea that prompted a meeting between Terry and Angus in 1998.Terry had spent many years working with book clubs and the whacky idea was The Box of the Month Club featuring chocolates rather than books. Angus had already been thinking along the same lines, but didn’t know how to make it work. Terry did. Angus changed the name toThe Chocolate Tasting Club and the rest is history. Terry has worked throughout the intervening years with Angus growing the Club to today’s 100,000 active members – and still growing! Terry’s experience has led to establishing the Club in Germany, Sweden and Norway with plans for further international expansion.Terry has been involved in marketing over 50 different Club programmes, but the Tasting Club is undoubtedly the most successful and the most enjoyable. He is a Member of the Institute of Direct Marketing.
He co-founded the Hotel Chocolat group nearly 20 years ago and, from scratch, it has been organically grown into the UK’s leading super premium chocolate brand. Angus is the creative force within the business with a hands-on approach to the development of new recipes and concepts, where he works with a talented team of specialists. He still insists on tasting every new chocolate recipe and concedes that he is obsessed about chocolate. Although he has been trained in chocolatier skills, Angus maintains that a creative mind and a passion for recipe integrity are more important, citing the company’s mantra of ‘Less Sugar, More Cocoa’. Stripping away excessive sugar allows the true flavours of the cocoa bean to express itself, particularly noticeable in the company’s pralines and high cocoa milk chocolates. Angus and Peter were voted Ernst & Young UK Entrepreneurs of the Year in 2008 for consumer businesses, Retail Week Emerging Retailer of the Year 2007 and Angus has recently been elected to the Board of The Academy of Chocolate.
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Matthew Margereson Operations Director
Peter Klauber Chairman
Lynn Cunningham Hotel Chocolat People & Ethics Director
Matt joined the team in May 2006 having worked in the food industry for 11 years culminating in the co-ownership of a small food group manufacturing and selling desserts, sorbets and icecream. It’s a short step from “sweets” to chocolate and Matt hit the ground running – and hasn’t stopped yet! During this time the operation has expanded and now produces over 60% of all of the chocolates sold by the Hotel Chocolat companies in total. The number of chocolates produced for Xmas 2009 was approximately 70% higher than the previous year amounting to over 50 million pieces. Matt controls Hadley Park with a handson philosophy; he gave up having an office because he rarely spends time in it, preferring instead to see all of the activity and processes first hand and working on strategic planning from any suitable quiet space. Matt’s area of responsibility will be a major beneficiary of the proceeds of Chocolate Bonds and so, not surprisingly, he’s a great supporter!
The co-founders recognised that broader expertise was needed to take the family of companies to the next stage. Peter, a former senior partner at Ernst andYoung, joined the team 2 years ago as Chairman of all the companies. His contribution has been considerable as the businesses have grown. He was attracted to the enterprise by the quality of the product, by the focus and creativity of the team and by his desire to help achieve the success and public recognition that the business deserves. Peter is a qualified FCA and has a number of other interests and board positions in companies including Dominos Pizza and Conforto Wealth Management. He is also a trustee of the Pennies Foundation.
Until recently, Lynn has been the “face” of the Chocolate Tasting Club ever since she joined as its Manager in 2001, and has been instrumental in guiding its success. She set up the Engaged Ethics programme in Ghana, which provides ongoing support of the cocoa farming community in the Osuben region, which she has regularly visited. Additionally she has introduced the ethical policies that are one of the central tenets of the family of companies, and developed the Chocolate Diploma which sets exacting standards for the creation of chocolate gurus throughout the team. Although she now has board responsibilities for HR and international partnerships, she still passionately supports the Club’s activities through her People & Ethics role. Lynn is often asked to speak on issues of Corporate Social Responsibility and last year addressed the University of Cambridge, the London School of Economics and Hertfordshire University’s Business School. Lynn holds an Honours degree in Economics.
I nternational Nicki Doggart CEO – Hotel Chocolat, Inc. Nicki Doggart joined Hotel Chocolat in 2007 with the task of making our presence felt in the USA via the launch of a US dedicated website and a delivery hub based in Boston. Having established our online presence, Nicki has been painstakingly planning our retail expansion, beginning with opening of two stores in Boston in late 2009. As CEO, she leads all of our US business operations – from sales, marketing and business development, to logistics, store development and recruitment.
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Nicki made a move to the ‘sweeter’ side of business after spending more than a decade in sales and marketing with several leading companies in the technology sector during the high tech boom. However, it was the creative, entrepreneurial spirit of Hotel Chocolat, combined with its Engaged Ethics stance that drew her away. Nicki is a confirmed ‘foodie’ with a passion for business social ethics, which were both underlined during her years attending French business school, L’Ecole Supérieure de Commerce, and Cranfield University’s School of Management – where she completed her MBA degree and organized the first Corporate Responsibility & Sustainability forum. She earned her undergraduate degree at the University of Wisconsin Eau Claire.
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Fredrik Ahlin Hotel Chocolat Creative Director
Heather Blackman Hotel Chocolat Commercial Director
Fredrik has over 15 years of experience of working with some of the most well known brands and magazines within fashion, beauty and luxury. He joined in 2006 and became a board member two years later. Using his keen eye for beauty and substance, he created the new design for the boxes and Club News that was introduced last year and received by members with great enthusiasm. Fredrik’s previous clients and employers include, amongst others, The Nobel Foundation, Chivas Brothers, FACE Stockholm and several editions of Vogue.
Our “Queen of Shops” joined the Group in 2008 and has re-engineered all customer and back of house activities enabling our energetic and welcoming store team to let their passion shine out. Having previously worked in fashion retail for 25 years she knows all about how to press the right buttons! Alongside our shops Heather looks after our online business, catalogue sales, corporate and wholesale, reaching our customers however they choose to buy from us, a truly multi channel approach. Heather is also responsible for the Buying & Merchandising team who shape the range from concept and development to on the shelf delivery. In her last role she was part of a team that won the Sunday Times Profit track 100 “Best Management Team” award and she has a degree in Business & Finance.
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Phil Buckley Estate Director, Saint Lucia, West Indies Our very own “Indiana Jones” joined in September 2005 to head up Hotel Chocolat’s strategic plans in Saint Lucia and the Caribbean. An engineer by profession, Phil has 25 years experience in the food industry, with major blue-chip companies, such as Cadburys, Dairy Crest and a successful track record of leading major new design and build capital turnkey projects in Europe and North Africa. Of these, 15 years were specifically within the chocolate industry, including a long career as manufacturing and engineering director. Phil has pioneered the development of our Engaged Ethics programme with 80 independent growers in Saint Lucia and has spoken at the International Cocoa Organisation’s world conference in Trinidad.
Phil welcoming the first cocoa grower, Laurence Auguste, to our Engaged Ethics programme in Saint Lucia, now there are 79 more.
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The legal bits R isk F actors
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In addition to the other relevant information set out in this document, the following specific factors should be considered carefully in evaluating whether to make an investment in the Chocolate Bonds in the Company. If you are in any doubt about the contents of this document or the action you should take, you are strongly recommended to consult a professional adviser authorised under FSMA who specialises in advising on investment in shares and other securities. The Directors believe the following risks to be the most significant for potential investors. The risks listed, however, do not necessarily comprise all those associated with an investment in the Chocolate Bonds in the Company and are not intended to be presented in any assumed order or priority. In particular, the Company’s performance may be affected by changes in legal, regulatory and tax requirements in the UK as well as overall global financial conditions.
Non-transferable (save on death) The Chocolate Bonds are not transferable or negotiable on the capital markets and no application is to be made for the Chocolate Bonds to be admitted to listing or trading on any market.
Investors should seek their own tax advice Investors should also take their own tax advice as to the consequences of owning Chocolate Bonds in the Company as well as receiving returns from them. No representation or warranty, express or implied, is given to investors as to the tax consequences of their acquiring, owning or disposing of any Chocolate Bonds in the Company and neither the Company nor the Directors will be responsible for any tax consequences for any such investors. The foregoing factors are not exhaustive and do not purport to be a complete explanation of all the risks and significant considerations involved in investing in the Chocolate Bonds in the Company. Accordingly and as noted above, additional risks and uncertainties not presently known to the Directors, or that the Directors currently deem immaterial, may also have an adverse effect on the Company’s business and prospects.
T erms & C onditions This Invitation, your Application and/or your participation in the Chocolate Bond, is conditional upon and subject to: 1.
the Company having received Applications from potential investors for subscription of Chocolate Bonds amounting to, in aggregate, not less than £500,000 (the “Subscription Threshold”) by not later than 5pm on 12th July 2010 (“the Long Stop Date”);
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your completed Application Form in respect of your Application, together with a signed personal cheque made payable to “Neville Registrars Limited a/c Chocolate Bonds” and crossed “Account Payee only” having been received by Neville Registrars Limited, who are acting as the Company’s receiving agents in connection with the Chocolate Bond, by not later than 5pm on the Long Stop Date; and
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the Company having accepted your Application in whole or in part (up to a maximum value of £10,000) in multiples of £4,000 or £2,000 Bonds.
Illiquid investment Investment in an unquoted security of this nature, being an illiquid investment, is speculative, involving a degree of risk. It will not be possible to sell or realise the Chocolate Bonds until they are repaid by the Company or to obtain reliable information about the risks to which they are exposed.
Use of proceeds by other companies The proceeds of the issue of the Chocolate Bonds may be used by other companies under the control of the shareholders of the Company. Whilst inter-company loan agreements have been entered into, there is a risk that these other companies may not be able to repay the debt advanced by the Company, in which case the Company may not have the funds to repay the Chocolate Bonds to investors.
No certainty that bond holders will be repaid The Chocolate Bonds are an unsecured debt of the Company and will rank pari passu with all future unsecured debts of the Company. There is no certainty or guarantee that the Company will be able to repay them. If the Company were to become insolvent, there is a risk that (a) some or all of the nominal value of the Chocolate Bonds will not be redeemed, and (b) some or all of the return due on the Chocolate Bonds will not be paid.
Not suitable for all reviewers of this document The Chocolate Bonds may not be a suitable investment for all reviewers of this Invitation or the Instrument.
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Upon receipt of your Application Form and cheque, your Application will be irrevocable and not be capable of being terminated or rescinded by you. The Company reserves the absolute discretion as to whether to accept your Application in whole or in part (in multiples of £4,000 or £2,000) up to a maximum of £10,000 per Applicant. Therefore, the Company may accept your Application in whole or in respect of part only of the nominal amount of Chocolate Bonds applied for in your Application (in which case the balance of the amount paid to you in respect of Chocolate Bonds which were not issued to you would be repaid to you).
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By completing and returning your signed Application Form, together with payment by cheque for the full amount of your Application, you will be making your Application on the terms and conditions contained in this Invitation and the Instrument. In particular, by making your Application, you will be deemed to warrant, represent, acknowledge and confirm: (a) that you are not relying on any information given or any representations, warranties, agreements or undertakings (express or implied), written or oral, or statements made at any time by the Hotel Chocolat family of companies (“the Group”) in relation to the Group or any member of the Group other than as contained in this Invitation and the Instrument and that, accordingly, no member of the Group, its directors, officers, agents, employees or advisers or any person acting on behalf of any of them shall have any responsibility for any such other information or representation; (b) you are not relying on any member of the Group or BDO to advise whether or not the Chocolate Bonds are a suitable investment for you; (c) that you are resident in the United Kingdom, are a natural person, and are 18 years old or more at the date of submitting your Application Form. Applications from joint applicants, companies, trusts or other organisations will not be accepted, nor will applications from persons who are not resident in the United Kingdom or are under the age of 18 years old at the date of submitting their Application Form; (d) you are entitled to make your Application and to be issued with Chocolate Bonds in respect thereof under the laws of and rules of any governmental bodies located in any jurisdictions which apply to you; (e) you are aware that it is open to you to seek advice from someone who specialises in advising on investments; (f) you are not entitled to be paid any commission in relation to your Application; (g) you and funds under your management are not engaged in money laundering; (h) you are making your Application on your own behalf and for no other person; and (i) The chocolate bonds issued by the Company which are the subject of the Invitation will be identical in all respects to all other chocolate bonds created by the Instrument SAVE ONLY for the alternative values offered and the differing Chocolate Return pertaining thereto.
Money Laundering It is also a term of your Application that, to ensure compliance with the Money Laundering Regulations 2003 (as amended), we or Neville Registrars Limited may, in our/their
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absolute discretion, require verification of your identity to the extent that you have not already provided the same. Pending the provision of evidence of identity, Chocolate Bonds acquired by you hereunder may be retained at the absolute discretion of the Company or Neville Registrars Limited. If within a reasonable time after a request for verification of identity, satisfactory evidence has not been supplied, the Company may, at its absolute discretion, terminate your Application in which event the cheque in respect of your Application will be returned to you without interest and at your risk. If you decide to make an Application, you have undertaken to the Company that you will pay for such Chocolate Bonds on acceptance.
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If, after carefully reading this Invitation and the Instrument, you wish to make an Application, please complete an Application Form (copies are available at www.chocs.co.uk/chocbond) and return it by post to Neville Registrars Limited, New Issue Department, Neville House, 18 Laurel Lane, Halesowen,West Midlands B63 3DA together with the full amount payable in respect of your Application (subject to a maximum amount of £10,000) by cheque made payable to “Neville Registrars Limited a/c Chocolate Bonds” and crossed “Account Payee only” which should be sent to be received by no later than the Long Stop Date (being 5pm on 12th July 2010). Cheques received in respect of Applications will not be cashed prior to the Long Stop Date. Please note that the decision to accept your Application, in whole or in part (and in multiples of £2,000 or £4,000 bonds up to a maximum of £10,000) is at the sole and unreserved discretion of the Company. Therefore, the Company may accept your Application in respect of part only of the nominal amount of Chocolate Bonds applied for in your Application (in which case the balance of the amount paid to you in respect of Chocolate Bonds which were not issued to you would be repaid to you). We will inform you in writing if your Application has been successful, in whole or in part, by 2nd August 2010 and, in the event that your Application has been successful, in whole or in part, send you a Certificate in respect of each of the Chocolate Bonds that have been issued to you either with such notification or within seven days of such notification. If your Application is not successful or the Subscription Threshold is not achieved, your cheque will be returned to you within seven days of the Long Stop Date without interest and at your risk. If your Application is successful in respect of only some of the Chocolate Bonds you applied for, a cheque for the balance of the amount of your Application (without interest) will be sent to you with your Certificates, at your risk.
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T he I nstrument DATED: 20th May 2010
The Chocolate Tasting Club Plc
INSTRUMENT Constituting ÂŁ10,000,000 Chocolate Bonds No.1
This document, which is a financial promotion for the purposes of Section 21 of the Financial Services and Markets Act 2000, is being issued by The Chocolate Tasting Club plc, which accepts responsibility for the information contained herein.This document has been approved as a financial promotion for UK publication by BDO LLP, 55 Baker Street, London W1U 7EU, which is authorised by the Financial Services Authority to conduct investment business.
I ndex 1. 2. 3. 4. 5. 6. 7. 8. 9.
Definitions and Interpretation Amount and Status of Chocolate Bonds Chocolate Return Redemption of Chocolate Bonds Prepayment Default Events Non-Conversion Certificates Transfer
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10. 11. 12. 13. 14. 15. 16.
Transmission Register of the Chocolate Bonds Warranties and Undertakings Notice Costs and Expenses Third Party Rights Governing Law and Jurisdiction SCHEDULE Chocolate Bond Certificate
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THIS INSTRUMENT is made by way of Deed Poll on 20th May 2010 BY THE CHOCOLATE TASTING Club Plc (registered number 04745935 whose registered office is at Mint House, Newark Close, Royston, Herts, SG8 5HL (the “Company”). TERMS:
1. Definitions and Interpretation 1.1 The following words have these meanings in this Instrument unless a contrary intention appears: Bondholder the person(s) entered in the Register as the holders of the Chocolate Bonds; Business Day a day other than a Saturday or a Sunday on which banks are open for business in London; Certificate or Chocolate Bond Certificate a certificate evidencing title to the Chocolate Bonds, in the form, or substantially in the form, set out in the Schedule to this Instrument; Chocolate Bonds or Chocolate Bonds No.1 the non-convertible, non- transferable Chocolate Bonds No.1 of the Company constituted by this Instrument; Chocolate Delivery Date (a) for Standard Members (as opposed to Trio members – referred to at (c) below) one standard Chocolate Tasting Club box every four weeks for a £4,000 Chocolate Bond and; (b) for a £2,000 Chocolate Bond one standard Chocolate Tasting Club box approximately every eight weeks or at a more frequent interval of the Bondholder’s choice (but never more frequently than every four weeks) until the Chocolate Return for the relevant annual period has been delivered to the Bondholder; and (c) for Trio Members one Trio box every four weeks, or at a less frequent interval of the Bondholder’s choice, until the Chocolate Return for the relevant annual period has been delivered to the Bondholder; Chocolate Return (a) for Standard Members: 13 standard Chocolate Tasting Club boxes per annum for a £4,000 Chocolate Bond or six standard Chocolate Tasting Club boxes per annum for a £2,000 Chocolate Bond; and (b) for Trio Members, 11 Trio boxes per annum for the £4,000 Chocolate Bond and five Trio boxes per annum for the £2,000 Chocolate Bond; Chocolate Tasting Club the club of that name operated by the Company; Commencement Date the date on which the Chocolate Bonds are first issued; Default Event has the meaning given to that term in Clause 6.1; Directors the board of directors of the Company from time to time; Instrument this instrument; Recognised Investment Exchange has the meaning ascribed to that term in section 285 of the Financial Services and Markets Act 2000; Register the register of Bondholders maintained by the Company as provided for in Clause 11; Registered Office the registered office of the Company from time to time; Standard Member a member of the Chocolate Tasting Club receiving a standard sized box which can be Classic Selection, Dark Selection or Elements; Trio Member a member of the Chocolate Tasting Club receiving a Trio sized box (Classic Selection only).
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1.2 In this Instrument, unless the contrary intention appears:(a) the singular includes the plural and vice versa and any gender includes the other gender; (b) ‘person’ unless the context otherwise requires includes a natural person, a firm, a partnership, a body corporate, an unincorporated association or body, a state or agency of state, trust or foundation (whether or not having separate legal personality); (c) a ‘natural person’ unless the context otherwise requires shall mean a human being, as opposed to a juridical person created by law; (d) a reference to: (i) a document means that document as amended, replaced or novated; (ii) a statute or other law means that statute or other law as amended or replaced, whether before or after the date of this Instrument and includes regulations and other instruments made under it; (iii) a clause or schedule is a reference to a clause or a schedule in this Instrument; and (iv) a month means a calendar month; (e) where the word ‘including’ or ‘includes’ is used, it is to be taken to be followed by the words:‘but not limited to’ or ‘but is not limited to’, as the case requires; (f) where a period of time is expressed to be calculated from or after a specified day, that day is included in the period; (g) a reference to “date of redemption” or “repayment” or “redeemed” or “repaid” means the date on which all the outstanding principal and accrued interest on all the outstanding Chocolate Bonds is finally paid; and (h) headings are inserted for convenience and do not affect the interpretation of this Instrument.
2. Amount and Status of Chocolate Bonds 2.1 The aggregate principal amount of the Chocolate Bonds created by this Instrument is limited to £10,000,000. 2.2 The Chocolate Bonds shall only be capable of being issued in nominal amounts of £2,000 or £4000 and no Bondholder shall be permitted to hold more than, in aggregate, £10,000 in nominal amount of Chocolate Bonds. 2.3 The Chocolate Bonds shall be issued to natural persons only and shall not be issued or registered in the names of more than one Bondholder. 2.4 Subject to this Instrument, and the Chocolate Return with reference to the nominal amount of Chocolate Bonds and with reference to Standard Members and Trio Members, the whole of the Chocolate Bonds as and when issued shall rank pari passu equally and ratably without discrimination or preference. 2.5 The Chocolate Bonds shall not be capable of being transferred by the Bondholder and shall not be capable of being dealt in or negotiated on any stock exchange or otherwise or other recognised or capital market in the United Kingdom or elsewhere and no application has been or will be made to any Recognised Investment The Chocolate Tasting Club plc C hocolate B onds I nvitation
Exchange for the listing of, or for permission to deal in, the Chocolate Bonds.
3. Chocolate Return 3.1 Chocolate Return is made on the Chocolate Delivery Dates. 3.2 Chocolate Return starts from the Commencement Date and ends on the Repayment Date. 3.3 Chocolate Return which has accrued but has not been dispatched will be available, at the Bondholder’s request, for dispatch following redemption of the Chocolate Bond, for one year following the relevant Repayment Date.
4. Redemption of Chocolate Bonds 4.1 All Chocolate Bonds not already repaid will be redeemed by the Company on the Repayment Date, at par, provided that the Bondholder completes the redemption form on the reverse of the Certificate and returns the same to the Company giving a minimum of six months notice prior to the relevant Repayment Date that he/she wishes to have them redeemed. If the Bonds are not redeemed then the Bondholder will continue to receive the Chocolate Return. 4.2 All payments of principal in respect of the Chocolate Bonds by or on behalf of the Company shall be made at the Bondholder’s risk: (a) either by cheque or bank transfer in favour of the Bondholder. If such payment is to be made by cheque, it shall be sent to the address notified to the Company for such purpose in writing by the Bondholder from time to time; and (b) free and clear of, and without withholding or deduction for, any taxes, duties, assessments or governmental charges of whatsoever nature imposed, levied, collected, withheld or assessed, unless such withholding or deduction is required by law. In that event, the Company shall make such withholding or deduction and shall, where required, account to the relevant tax authority for such withholding or deduction. For the avoidance of doubt, in such circumstances, the Company shall not be required to increase or gross-up any payment of principal made hereunder. 4.3 All Chocolate Bonds redeemed by the Company pursuant to the terms of this Instrument will be cancelled and will not be available for reissue. 5. Prepayment by the Company In addition to Clause 6.1 below, the Company will be entitled to pre-pay any or all of the principal of the Chocolate Bonds prior to the Final Repayment Date. 6. Default Events 6.1 Notwithstanding Clauses 4 and 5 and subject to Clause 6.2, all outstanding Chocolate Bonds shall become immediately repayable, at the option of a Bondholder, at par together with the dispatch all accrued Chocolate
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(b)
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(d) 6.2
Return up to and including the date of redemption, on the happening of any of the following events (each a “Default Event”): an order is made or an effective resolution passed for winding-up or liquidation of the Company (otherwise than for the purposes of or in the course of a solvent reorganisation, reconstruction or amalgamation); or an encumbrancer has taken possession of or if a receiver, administrative receiver, liquidator, judicial factor or other similar officer is appointed to take possession of the whole or any material part of the property or undertaking of the Company and in any such case is not discharged, withdrawn or removed within 14 days of possession being taken or an appointment being made provided that at all times during such period the Company is contesting such possession or appointment in good faith and diligently; or any administration order or any administration application has been made in respect of the Company; or any procedure or step analogous to the events set out in 6.1(a) to (c) is take in any jurisdiction. The Company will use reasonable endeavours to give notice to the Bondholders of the happening of any Default Event within ten (10) Business Days upon becoming aware of the same. If any Bondholder shall waive in writing his or her right of repayment of the principal amount due to him/her under the Chocolate Bond, the Chocolate Bonds held by such Bondholder shall remain outstanding.
7. Non-Conversion
The principal amount of the Chocolate Bonds held by a Bondholder shall not be capable of conversion into shares or other securities in the Company.
8. Certificates 8.1 The Certificates will be in the form or substantially in the form set out in the Schedule. 8.2 The Company will recognise the Bondholder indicated in the Register as the absolute owner of the Chocolate Bonds.The Company is not bound to take notice or see to the execution of any trust whether express, implied or constructive to which any Chocolate Bonds may be subject. 8.3 If any of the Bondholder’s Chocolate Bonds are due to be redeemed under any of the provisions of this Instrument, the Bondholder shall, if requested by the Company, deliver up to the Company (at its Registered Office) the Certificate(s) for the Chocolate Bonds which are due to be redeemed in order that the same may be cancelled and, upon such delivery (if so requested by the Company), the Company shall pay the relevant redemption amount to the Bondholder. 8.4 If any of the Bondholder’s Chocolate Bonds are liable to be redeemed under any of the provisions of this
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Instrument, and, following a request by the Company, it fails to or refuses to deliver up the Certificate(s) for such Chocolate Bonds at the time and place fixed for the redemption of such Chocolate Bonds, then the Company may set aside the relevant amount due to the Bondholder, pay it into a separate interest-bearing bank account which shall be held by the Company in trust for the Bondholder (but without interest (save as may accrue in such account)) and such setting aside shall be deemed, for all purposes of these conditions, to be a payment to the Bondholder and the Company shall thereby be discharged from all obligations in connection with such Chocolate Bonds. If the Company shall place such amount on deposit at a bank, the Company shall not be responsible for the safe custody of such amount or for any interest accruing on such amount in such account. 8.5 If any Certificate is lost, stolen or mutilated, defaced or destroyed, it may be replaced at the Registered Office, subject to all applicable laws, upon such indemnity being provided by, and an administration fee being paid by, the relevant Bondholder as the Directors may reasonably require.
9. Transfer
The Chocolate Bonds are not transferable in whole or in part and the Directors shall not approve or arrange registration of a transfer of Chocolate Bonds.
10. Transmission 10.1 Any person becoming entitled to Chocolate Bonds as a result of the death or bankruptcy of a holder of Chocolate Bonds or of any other event giving rise to the transmission of such Chocolate Bonds by operation of law may, upon producing such evidence as reasonably required by the Directors of the Company, be registered as the holder of such Chocolate Bonds. 10.2 In the case of death of a registered holder of Chocolate Bonds, the only persons recognised by the Company as having any title to the Chocolate Bonds are the executors or administrators of a deceased sole registered holder of Chocolate Bonds or such other person or persons as the Directors of the Company may reasonably determine and they will be entitled to require repayment of the Bond at par.
11. Register of the Chocolate Bonds 11.1 The Company will at all times keep at its Registered Office, or at such other place as the Company may have appointed for the purpose, a register showing: (a) the nominal amount of the Chocolate Bonds held by the Bondholder; (b) the serial number of each Chocolate Bond issued; (c) the date of issue and all subsequent transmissions of ownership; and (d) the name and address of the Bondholder as bondholder.
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11.2 The Bondholder may at all reasonable times during office hours inspect his/her details entered in the Register and take copies of such details from the Register. 11.3 The Register may be closed by the Company for such periods and at such times as it thinks fit but not more than thirty (30) days in any calendar year. 11.4 Any change of name or address on the part of the Bondholder must be notified to the Company and the Register will be altered accordingly.
12. Warranties and Undertakings 12.1 The Company undertakes to the Bondholder that: (a) it will perform and observe the obligations imposed on it by this Instrument; and (b) it will comply with the provisions of the Certificates; and (c) the Chocolate Bonds are held subject to and with the benefit of the terms and conditions set out in this Instrument and are binding on the Company and the Bondholder and all persons claiming through or under them. 12.2 The Company warrants to the Bondholder on the date of this Instrument, and at all times while such Bondholder holds Chocolate Bonds, that: (a) it has the power and authority to enter into this Instrument and to issue the Chocolate Bonds and to exercise its rights and perform its obligations under this Instrument and the Chocolate Bonds; and (b) it has taken all necessary corporate, shareholder and other action to authorise the execution, delivery and performance of this Instrument; and (c) the Company has been duly incorporated, constituted or amalgamated and is validly subsisting and is in good standing under the laws of the jurisdiction in which it is incorporated, constituted or amalgamated.
13. Notice 13.1 Any notice or other communication to be given under this Instrument must be in writing and will be served by delivering it personally or sending it by pre-paid post to
the address and for the attention of the relevant party set out below (or as otherwise notified by that party). Any notice will be deemed to have been received: (a) if delivered personally, at the time of delivery; (b) in the case of pre-paid post, 72 hours from the date of posting; (c) in the case of registered airmail within three (3) Business Days of the date of posting; and 13.2 If deemed receipt occurs before 9am on a Business Day the notice is deemed to have been received at 9am on that day and if deemed receipt occurs after 5pm, the notice is deemed to have been received at 9am on the next Business Day. 13.3 The addresses of the parties for the purposes of the Instrument are as set out in the Register from time to time, and in the case of facsimile numbers as advised by the Company from time to time, or such other address as may be notified in writing from time to time by the relevant party to the other party.
14. Costs and Expenses
Each party shall pay its own costs, charges and expenses relating to the negotiation, execution and implementation of this Instrument.
15. Third Party Rights
No person shall have a right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Instrument.
16. Governing Law and Jurisdiction 16.1 This Instrument and each of the Chocolate Bonds is governed by and shall be construed in accordance with the law of England and Wales. 16.2 Each party irrevocably submits to the exclusive jurisdiction of the courts of England and Wales as regards any claim, dispute or matter arising out of or in connection with this Instrument.
EXECUTED as a DEED on the day and year set out above for and on behalf of THE CHOCOLATE TASTING Club Plc acting by:
Director
Director
The Chocolate Tasting Club plc C hocolate B onds I nvitation
T he
legal bits
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S chedule Chocolate Bond Certificate Certificate No. ………………………….. Nominal Amount £ ……………………………. THE CHOCOLATE TASTING Club Plc (Incorporated and registered in England and Wales with Company Number 04745935) Chocolate Bonds No.1
Ten Thousands
0
Thousands
0
Hundreds
0
Ten
0
Units
0
THIS IS TO CERTIFY THAT
is/are the registered holder(s) of Chocolate Bonds No.1 constituted by an Instrument of The Chocolate Tasting Club plc dated 20th May 2010 (“the Instrument”) in the above sum.The Chocolate Bonds No.1 are issued subject to the rights and restrictions contained in the Instrument. Given under the Securities Seal of the Company on this the [Date].
on the day and year set out above for and on behalf of THE CHOCOLATE TASTING Club Plc acting by: Director
Director
NOTES: The Company reserves the right to require that this Certificate or a certificate of indemnity in a form reasonably approved by the Directors be presented upon the redemption of the Chocolate Bonds represented by this Certificate. No transfer of the whole or any portion of the above Bonds can be registered without the production of this certificate. Registrars: Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA
C hocolate B onds I nvitation The Chocolate Tasting Club plc
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R eferences
References The Chocolate Tasting Club plc
Cambridge
Lakeside
3 Petty Cury CB2 3NE
Mint House Royston Hertfordshire SG8 5HL www.chocs.co.uk www.hotelchocolat.co.uk
Canterbury
Unit 288 Thurrock Lakeside Shopping Centre West Thurrock RM20 2ZP
Head office
Germany San Coa – Club Chocolat Daimlerstrasse 86 70372 Stuttgart www.Sancoa.de
Sweden Smaka Sjoklade – The Chocolate Tasting Club Box 8114 200 41 Malmo www.Smakachoklad.se
Norway SmakeSjokolade The Chocolate Tasting Club PB 1765 Vika 0122 Oslo www. SmakeSjokolade.no
Hotel Chocolat Stores – UK Basingstoke
Unit 2 8-9 The Parade CT1 2SG
Chancery Lane 4 Great New Street London EC4A 3BN
Chester 8 Northgate Street CH1 2HA
Chichester 33 East Street PO19 1HS
Dudley 50A Merry Hill Centre Brierley Hill West Midlands DY5 1SR
Exeter 7 East Gate Princesshay EX1 1GB
Gateshead
26 Mayfair House Festival Place RG21 7JY
Unit 41b Cameron Walk Metro Centre NE11 9YR
Birmingham
Guildford
The Middle Mall The Bull Ring B5 4BU
8 Market Street GU1 4LB
Harrogate
Bluewater
35 James Street HG1 1QY
Unit 057 Upper Thames Walk Greenhithe DA9 9SQ
Brighton 11 Duke Street BN1 1AH
Bristol George White Street Cabot Circus BS1 3BA
Bromley Unit 89 The Glades Shopping Centre High Street BR1 1DN
Kensington 163 Kensington High Street London W8 6SU
Kings Road 182a Kings Road Chelsea London SW3 5XP
Knightsbridge 3 Montpelier Street Knightsbridge London SW7 1EX
The Chocolate Tasting Club plc C hocolate B onds I nvitation
Leeds 20 Albion Place LS1 6JS
Maidstone 11 Fremlin Walk Shopping Centre ME14 1QG
Manchester Unit L30 Northern Extension New Cannon Street Arndale Centre M4 3AJ
Milton Keynes 67 Silbury Arcade The centre:mk MK9 3AG
Moorgate Moorgate Hall 143-171 Moorgate London EC2M 6XD
Norwich 240 North Terrace Chapelfield NR2 1SQ
Nottingham 6 Albert Street NG1 7DA
Oxford 132 High Street OX1 4DN
Plymouth Unit 6 1 Charles Street Drake Circus Shopping Centre PL1 1EA
Reading Unit 29B Town Mall Walk The Oracle Shopping Centre Reading RG1 2AH
R eferences
Sheffield 75 High Street Meadowhall S9 1EN
Solihull 73 High Street B91 3SW
Southampton Unit 59a West Quay Shopping Centre SO15 1QE
St Albans 34 Chequer Street AL1 3YD
Strand 78 Strand London WC2R 0DE
Telford 28 Sherwood Street Telford Shopping Centre TF3 4B
Victoria 133 Victoria Street London SW1E 6RD
Watford Unit 132 Harlequin Centre WD17 2TJ
Windsor 24 Peascod Street SL4 1DU
Hotel Chocolat Stores – International USA
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Registrars for Chocolate Bonds Neville Registrars Limited Neville House 18 Laurel Lane Halesowen West Midlands B63 3DA
141A Newbury Street Boston MA 02116 The Mall at Chestnut Hill 199 Boylston Street Boston MA 02467
Advisors to the Bond issue Memery Crystal LLP
44 Southampton Buildings London WC2 1AP
Bahrain Bahrain City Centre Mall Manama
BDO LLP
Dubai
55 Baker Street London W1U 7EU
Mirdiff City Centre Mall UAE
Kuwait Al Kout Mall Fahaheel
Hotel Chocolat Factory Hadley Park Huntingdon Cambridgeshire PE29 7HF
Rabot Estate Locations Saint Lucia
The Rabot Estate Soufrière
London – Shop Stoney Street Borough Market SE1 1TL
York 34 Coney Street YO1 9ND
C hocolate B onds I nvitation The Chocolate Tasting Club plc
F inal
thoughts
It’s very rare in life to find something that is good on many levels, but I truly think The Chocolate Bond is one. Whilst you will be earning a favourable and tasty rate of return, your investment will be made to work in worthwhile projects to create jobs, bring prosperity and make a real difference in cocoa growing. Thanks for taking the time to read our invitation and I hope we may be able to work together.
Doing things differently…
…doing things better © The Chocolate Tasting Club plc 2010 Mint House Royston Hertfordshire SG8 5HL UK Tel: 08444 933 933 Fax: 08444 937 590 Website: www.chocs.co.uk